Dreamfolks Services Limited (DREAMFOLKS) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Q1 FY27 Earnings Conference Call of DreamFork Services Limited. As a reminder, all participant nines will be in a listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during a conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Liberata Kalat. Thank you, and over to you, ma'am.

Good evening, everyone, and thank you for joining us. We appreciate your continued interest and engagement with the company. Earlier today, we announced our financial results for the quarter ended 30 June 2026. The detailed financials and investor presentation have been made available on the stock exchanges as well as on our website, and we hope you had an opportunity to review them. As we begin FY27, I would like to reflect briefly on the journey we have undertaken over the past year. FY26 was a year of significant disruption and structural change, particularly in the domestic airport lounge ecosystem. While this transition had a material impact on our financial performance, it has also accelerated a transformation that had been preparing for, from being predominantly a lounge aggregator to becoming a broader travel and lifestyle benefit platform. The most important change we are seeing today is in the way our banking and enterprise partners are designing their customer value propositions. The focus is increasingly shifting from a single, standardized benefit to a more personalized combination of experiences based on customer segments, spending behavior, and usage patterns. An example of that is the launch of Boring Pass-based travel benefit program for one of the largest bank's premium credit card users. This enables customers to access relevant travel benefits seamlessly through their journey, while allowing our banking partners to deliver a more. We believe such propositions are an important indication of how the card benefits ecosystem is evolving and where dream folks can add value. This plays directly to dream folks' strengths, given our ability to aggregate multiple services and configure them through our technology platform. We are therefore increasingly positioning ourselves not merely as a service provider, but as a benefit technology platform that enables clients to design, distribute, and manage differentiated customer propositions across travel and lifestyle categories. This evolution is supported by favorable structural industry trends. India's credit card transaction value is expected to grow from approximately 21 trillion in FY25 to 54 trillion in FY30, representing a gig of around 21%. While transaction volumes are expected to increase to nearly 13 billion, at the same time, global travel and tourism continues to expand. With the sector contributing approximately $11.6 trillion to the global economy in 2025, APAC remains one of the key growth engines for global aviation, while Southeast Asia's tourism market is expected to grow from approximately $35.5 billion in 2025 to $67.4 billion by 2031. These trends reinforce our conviction that the long-term opportunity extends well beyond traditional airport lounge access. Against this background, we continue to broaden our service portfolio across the travel and lifestyle. During the quarter, we went live with several major banking programs covering global lounges, global meet and assist, airport transfer, and premium members-only clubs. These programs demonstrate how our platform is increasingly being used to create bundled and differentiated propositions rather than simply providing individual services. Our code network also continues to widen steadily. As of the end of the quarter, we had 1,100 plus global airport lounges with more than 70 new outlets added during the quarter. Railway lounges remain an important growth opportunity for us, with 100% coverage across the country. The acquisition of 1011 Hospitality has strengthened our operational control over this segment and enabled us to participate more directly in the growing premium railway travel ecosystem. With the continued modernization of India's railway infrastructure, we see significant potential for railway lounges to become an increasingly important component of the broader travel and lifestyle benefit ecosystem. Golf is another category where we continue to see significant headroom. We now provide access to more than 80 golf clubs listed in India and over 860 golf courses internationally, strengthening our ability to offer premium lifestyle benefits across geographies. Another area we are closely monitoring is our DF Club membership program. The initial response has been encouraging, with number of memberships sold is showing steady quarter-on-quarter growth. While the initiative is still at an early stage and we remain measured in our approach, the traction so far gives us confidence in its potential to evolve into meaningful direct-to-consumer and lifestyle engagement channel over time. Importantly, the contribution from business outside our traditional lounge offerings has continued to increase. Our non-airport lounge services contributed approximately 33% of the top line during the quarter. This is a significant milestone for us because it demonstrates that the diversification strategy is no longer simply a strategic intent. It is increasingly reflected in the composition of our business. At the same time, our focus remains on deepening relationships with existing clients. Rather than viewing a partnership only through the lens of traditional lounge access, we are working with clients to introduce multiple categories of benefits through the same technology and distribution infrastructure. This enables us to increase wallet share, improve engagement, and create stickiness within our client ecosystem. As we look ahead, our priorities remain clear, scale our global lounge network and strengthen our position relative to global peers, expand the railway lounge network to our subsidiary 1011 hospitality, redefine credit card benefits in India by moving beyond the legacy domestic lounges proposition and offering a broader range of travel and lifestyle experiences. The journey from a travel-focused aggregator to diversified travel and lifestyle benefit management technology platform is well underway. The progress we are seeing across global volumes, new client programs, network expansion, and the increasing contribution from non-lounge services gives us confidence that the foundations built during F526 are beginning to translate into more diversified and resilient business. Planning to our financial performance for the quarter ended 30 June 2026, the company reported revenue of 39 crores. Gross profit from the quarter stood at negative 0.9 crores, primarily impacted by the upfront minimum guarantee payment made to support the expansion of our global launch business. We expect these investments to be recovered to increase transaction volumes and scale up the global business over the coming quarters. The adjusted EBITDA after adjusting for non-cash expense stood at negative 16.4 crores. While near-term profitability has been temporarily affected due to structural research and efforts to expand globally and enter new geographies, we believe the rapid adoption of new age lifestyle services and deeper integration in the global and railway lounge business segment, we should be able to grow bigger than ever. Despite these headwinds, our balance sheet remains strong and resilient. We close the quarter with cash and cash equivalent of INR 193.3 crores, providing significant financial flexibility to execute more strategic initiatives. Our network, as on 30 June 2026, stands at a healthy INR 300.4 crores, a position that underscores our ability to invest in growth while maintaining financial discipline through this period of transformation. We remain confident that the investments we have made in platform, people, partnership, and geographies will translate into meaningful value creation as industry conditions normalize and our viewer revenue streams gain scale. I would now like to hand over to Shekhar for a detailed financial update.

Thank you, Rivrata. Good evening, everyone. I will now take you through our financial performance for the quarter ended 30th June, 2026. We reported revenue of INR 39 crores compared to INR 52.6 crores in the last quarter and INR 348.9 crores in Q1 FY26, while the adjusted EBITDA came in at a negative INR 16.4 crores compared to a negative INR 14.4 crores in the last quarter and 30.5 crores in Q1 FY26. The recent impact on profitability is primarily a result of lower revenue against our existing operating cost base. Once the high-revenue-contributing businesses in which we are currently investing begin to scale and unlock their full potential, we expect the incremental contribution to help us absorb our fixed overheads and improve the operating leverage. As of 30 June 2026, While cash and cash equivalents increased to INR under 93.3 crores from INR under 49 crores in the previous quarter. Reflecting our continued focus on efficient working capital management. A strong balance sheet and healthy liquidity position provide us with the financial flexibility to pursue our growth opportunities while maintaining prudent capital allocation and financial disciplines. With that, I open the floor for questions. Thank you.

Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use hands-wept while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Svash Vedmata with Perpetual Capital Advisors. Please go ahead.

Hello. Am I audible?

Yes, sir.

Thank you for this opportunity. So my first question is regarding the unit economics on our railway lounge. I wanted to ask how much does it cost for us to open one and how long before it earns that back?

So, in terms of the CapEx, if you are asking, then it depends from lounge to lounge, because every city has a different cost. Secondly, it also depends on the size of the lounges, because not every railway station, you know, we actually get the same cost, I mean, the same size. But however, on average, I would say that, you know, right now, Starting from a 2,000 square feet lounge, what we have, where we also have a 14,000 square feet lounges, so it depends from 1.5 CR going up to maybe 5 to 6 CR is the CapEx investment right now. It is just the CapEx investment what I'm talking about, but apart from that, there are other investments, which is the security deposit and the initial advances, which are also being given to the railways.

Okay, got it. And also, you mentioned that railway lounges could be a 500 crore opportunity over four miles. Could you like walk me through what needs to happen for that number to be here? Like how many stations and how many customers per station are we expecting?

So, if you were to look at our Prime Minister's speech, the kind of investment that they have envisaged, if that is happening over a period of next three to four years, I think we are confident, and that is the number that we have actually calculated, and this 500 crores in the next five years is very much possible considering that kind of investment.

Okay, got it. And one last question. How did the margin economics of ETT compare to what you historically earned in the India lounge business? Are they like structurally better? Okay.

Recently, actually, if you look at it, it is at a similar age. But however, as we mentioned to you that, you know, there are investments in terms of advances or we are also trying to ensure that, you know, because of the pricing, price benefit, we are also giving them in advance amount to the launch operators. So I would say that, you know, all that cost right now is considered. And I would say, presently, you would not see a better margin compared to what it was earlier. But eventually, I would say that, yes, the margins would get better for global.

Okay, got it. Thank you.

Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and 1. The next question comes from the line of Maruti Nandan Sarada, an individual investor. Please go ahead.

Thank you. Thank you for the opportunity. Good evening to the management. My question is regarding how many quarters we are looking at. To be neutral as far as the bottom line is concerned, that means that break-even level, when are we expecting, how many quarters it is going to take, and if you can just explain in detail, you know, how we are going to reach over there.

So, I would say that, you know, by next year, you know, we will actually come to the break-even time. Okay, now if you actually asked me what the model would be, but, you know, the model is that, you know, we are focusing more on the global lounges right now. Okay, the focus is on global lounges, the focus is on calls, and also the other services which we have introduced. Now, as we all know that, you know, any new services which actually get introduced in the market, it takes time for the awareness to be built up. So, I would say, now if you see one of the largest banks which has actually introduced the other services. Now, these services were introduced in the month of mid of May. So, initially, when it was launched, I would say that, you know, there was communication from the bank, but I think the communication from the bank is not on the regular front, but it is only a word of mouth which actually spreads, and it takes time. So, I would say that this particular service itself will take at least a year to pick up, and we start seeing numbers coming from there. Similarly, it would be for the other services as well. Now, coming to global lounges, now, the impact of the war has actually impacted our business, and that's the reason, you know, the global lounge, you know, the numbers have dropped drastically compared to what we see in the last quarter. Otherwise, I think we could have actually made, I mean, I would say that, you know, in terms of the transactions, the number and the top line would have been much better if there was no war. So I would say that these are the impacts which have happened. But yes, Global Lounge, Golf, other services would be the one which will grow eventually in a couple of quarters. And by next year, I would say that yes, we would be in the breakable.

Okay. Okay. My second question is in respect of the employee cost, I believe that in the current quarter, we had the ESOP extension. So can you just give me the breakdown and will it continue in the ensuing quarters as well?

If you talk about the ESOP cost, so frankly its impact is very minimal. So if you talk about on full year basis, the impact of those ESOPs which are issued is only 14 lakhs. So that is not at all impacting. So if you see basically the variance that is appearing, if you are comparing the current quarter number, so these will be more or less equivalent to what we have been doing in the previous quarter. So payroll cost, it almost stands there. In the last quarter, it would have seen our commentary, then there was a reversal of the variable pay. So as a result, the number for March quarter was looking quite low.

Okay, so we will be continuing with the current quarter's number in the forthcoming quarter as well, right?

Right, yes. Almost in the similar manner, yes.

Okay. And can you just show some light on the data? Like, you know, we had quite a big chunk outstanding at the end of previous quarter. So right now, what is the situation and do we have anything which is more than 90 days old? So, what is the current data number at the end of June quarter?

So, frankly, it's the balance sheet number, so we have just published only P&L numbers.

Not to forget that we are dealing with all the banks. So, frankly speaking, you know, over a period of time, whatever you see, the collection, that is absolutely from these institutions, and we don't see any risk here. Just to answer your question, if there is, in your mind.

Thank you. Thank you for clarification. Thanks.

Thank you. Participants who wish to ask a question may press star and 1.

Ladies and gentlemen, if you wish to ask a question, you may press star and 1.

Yes, we have a follow-up question from the line of Spesh Ben Muttah with Perkutal Capital Advisors. Please go ahead.

Hello. So, I had one more question regarding the Club 2.0. Like, what's the paid membership count or average revenue for user, and how's the retention so far?

So, yeah, it's relatively new. I'll tell you why relatively new, because while we launched it, you know, few months back, the real effort in terms of, you know, broadcasting it and using social media has just started. Point number one. In terms of average... Cost, I think, you know, if you were to look at it, we have three, which is white, orange, and black. So we are selling more of black, which is the high-end model, where the cost is 50,000 to the consumer. To answer your question, what would be the average? The average among all the three would be ballpark 30,000. And we have just started. In fact, you will soon see the numbers getting published. We are significantly improving the numbers. So what we were doing versus what we have done even in the month of July or for that matter June are significantly up. But yeah, it's very minuscule as compared to the total revenue. But we will start publishing as and when we feel that it is significant impacting on the revenue.

Okay. All right. Thank you. The next question comes from the line of Maruti Nandan Sarada and Vigil Investor. Please go ahead.

My question belongs to the promoter holding that since the share price is hovering around very low level, so does promoters have any plan of increasing their shareholding considering that in the next couple of years, they are looking at a very bright future for the company?

Presently, I think there is no such plans in the promoter growth, because presently I think the focus is completely on how to bring the business back into where we were. I think the focus is completely on that, and I think it is also important that, you know, once we grow the business and to actually have the right strategic investors with us. So I would say that, you know, that is where the focus is.

Okay, so are we looking for any strategic investors right now to invest in our company?

As I presently told you that, you know, right now our focus is completely on building and getting back into action where we have started. And I think it is not the right time for me to actually meet up, but it is always better that, you know, first we perform and show, and then it would be better for me to go and meet the investors. So right now, I would say that the complete focus is on building the business and nothing on this.

Thank you.

Thank you. Our next question comes from the line of Palamundi Kashna with Oman Investment Advisors. Please go ahead.

Hi, I am Mr. Opener. Please clarify why there is a drop in revenue, Q of Q. Is it due to any decrease in revenue from domestic side or any other risk?

I have told you that if you look at it, it is a drop in the global lounge business, and the drop is drastically because of the war which is happening. So, yes, internationally, the traffic is down, and that is one of the biggest reasons that, you know, why there is a drop in the record.

Okay. So, any other further deals we finalized in this last quarter in this international, in addition to the deals which we are running with Q1?

Sorry, your voice is not clear. Can you please repeat the question?

So, internationally, have you gained any new customers in this last quarter, Q1, or similar to the Q4?

No, so we have gained customers, and I would say the clients in APAC. So we have a very large network in Singapore, where we have already signed up, and our program would be going live, hopefully by end of this month, or early next month. Our second one is in Indonesia, one of the largest banks in Indonesia. Also, we have also gone right there. There is also one of the banks in Singapore as well, where we have signed, and there is an integration right now with that bank going on. So, yes, these are the three large clients which have signed up for APAC.

Yeah, that's the great news actually. So in the Middle East, do you have any pipeline, Dubai, Oman, Saudi, Qatar? These are some of our competitors are very dominant in these countries. So do you have any pipeline on a discussion with any other banks or coordinate or so on?

So we are aware that we have acquired a Dubai-based company, which is ETT. Now, because of the war, yes, the business is down in the Middle East. So that is one of the reasons that, you know, we are not able to move in the Middle East region right now.

Finally, on the EBITDA break-even, I think we are planning the H2 of 528, so do you stick to that, or is this coming in line, so do you think that we can do that a little bit earlier also?

Presently, I would say that I would stick to what we have committed last time. If it happens earlier, for sure, we will also announce the same.

Okay. Thank you. That's not much.

That's not much.

Thank you. The next question comes from the line of K. Sahu with K. Investments. Please go ahead.

Hello. Am I audible?

Yes.

Yeah, I have two questions. First, on cash part, what explains the cash appreciation in the books by around 44 crores? Is it a better realization that we had from the previous services we had provided? Because last quarter in March, we had a data position of 134 crores, I guess. So, has there been any significant realization from there? And second would be on, actually, I saw that generally Q1 is a season where we have a better. Now, Q1Q growth, like most of the past 3-4 years, I saw that against the Q4, you have a better Q1 on Q1Q basis. What explains this particular drop of 56 to 39 crore in revenues this quarter?

So, regarding your first question about the... As I explained earlier, there has been significant efforts in terms of collection. So you are right, there has been like collection of nearly 40 plus crore which is there from different customers.

Yeah, sorry, and regarding your second question. As compared to Q4, but I think Libreta did explain that, you know, significant portion of our business is global now, and India outbound to Middle East contributes significantly in terms of traffic, overall traffic, we all are aware of it. So that has dropped because of the war, and that has impacted the volume.

Okay, okay. So, So, Indian business is not there and the international business is impacted by the Middle East, Western Asia war. Is it the case?

Yes. So, in fact, our India business is to an extent compensating for the loss that is happening in the Middle East. Okay.

If I may ask one more follow-up question, I see that there is a significant reduction in cost, and the cost of services provided is approximately matching the revenue this particular quarter. So, will it be the run rate we will be going forward in Q2, Q3? So, even if we are not EBITDA positive, our cost of services would be matching our revenues at least?

Yes, see, cost of service is a derivative of revenue. So, yes, there is a drop in revenue, and hence, of course, there is a drop in terms of cost. And you are aware that, you know, our margins, gross margins, are going to be what they are. So, the cost line and the revenue line will be in line.

Yeah, and as we explained, this time we have done like a few of the payment for MMG. However, going forward, like there will be no such payment. So anyways, you will see positive margins.

Okay, okay, okay. Thanks, guys. This is the questions from my side. All the best for the future.

Thank you. Participants who wish to ask a question may press star and 1. Thank you. As there are no further questions from the participants, I would now like to hand the conference over to Ms. Libretta Kalat for closing comments.

Thank you all for joining our earnings conference call today. We hope your queries have been addressed. For any further information, please reach out to our investor relations. Team, on behalf of the entire Dreamforce family, I want to express a gratitude for your continued trust and patience to what has been a year of meaningful transformation. We look forward to sharing our progress with you in the quarters ahead. Thank you, take care, and goodbye.

Thank you. On behalf of Dreamfolk Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lights. Thank you.